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Government publishes rental reform White Paper

Published On: June 16, 2022 at 11:48 am

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Renters (Reform) Bill 'a golden opportunity to improve standards in the PRS'

The Government has published its Fairer Private Rented Sector White Paper, which it claims will “ensure millions of families benefit from living in decent, well looked-after homes as part of the biggest shake up of the private rented sector in 30 years.”

The Government’s plans include:

  • Banning section 21 ‘no-fault’ evictions and extending the Decent Homes Standard to the sector
  • Ending arbitrary rent review clauses, giving tenants stronger powers to challenge poor practice, unjustified rent increases and enabling them to be repaid rent for non-decent homes
  • Making it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits
  • Giving all tenants the right to request a pet in their house
  • Moving all tenants onto a single system of periodic tenancies, meaning they can leave poor quality housing without remaining liable for the rent or move more easily when their circumstances change
  • Doubling notice periods for rent increases and give tenants stronger powers to challenge them if they are unjustified

Responding to the publication, Alicia Kennedy, Director of Generation Rent, comments: “It is very welcome to finally have this White Paper. It has been more than three years since the Government first committed to getting rid of Section 21 evictions. 

“Thousands of tenants have lost their homes on their landlord’s say-so in that time and many more will live with uncertainty until this legislation is passed.

“The private renters we represent have been telling the Government it is too easy to find themselves renting from unscrupulous landlords who fail to keep their homes in good condition. So it is positive that the measures include mandatory registration of landlords through a property portal and an Ombudsman to hold landlords to account – hopefully meaning there will be more ways to claim back rent on substandard properties. 

“The Government has also rightly recognised renters need flexibility, which periodic tenancies will provide. Making it illegal to have a blanket bans to protect families with children and people receiving benefits is also very welcome.

“However, we’re disappointed with the detail around the new proposed ‘no fault’ grounds which allow landlords to evict tenants to sell or move family in.

“The Government proposals still mean a renter could be evicted every 8 months due to no fault of their own.

“Renters, especially those with children in local schools, need longer than a few months to pack up and move out. And with every unwanted move costing around £1700 this is too much to pay without compensation when it’s not your choice to move.

“Without proper safeguards we could still see thousands of tenants facing the hardship of unwanted moves, and more staying quiet about disrepair out of fear of a retaliatory eviction. 

“If the Government can get the detail right and give tenants the confidence they need to request improvements and plan for the long term, this legislation has the potential to improve the lives of millions throughout England.”

Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), comments: “Whilst headline commitments to strengthening possession grounds, speedier court processes and mediation are helpful, the detail to follow must retain the confidence of responsible landlords, as well as improving tenants’ rights.

“We will be analysing the Government’s plans carefully to ensure they meet this test. A failure to do so will exacerbate the housing crisis at a time when renters are struggling to find the homes they need.

“The eventual legislation needs to recognise that government actions have led to a shortage of supply in the sector at a time of record demand. It is causing landlords to leave the sector and driving up rents when people can least afford it.”

Research uncovers UK’s most unaffordable areas to rent a home

Published On: June 15, 2022 at 8:16 am

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Research uncovers UK’s most unaffordable areas to rent a home

Almost a third (31%) of postcodes in England and Wales are considered unaffordable, rental market research finds.

Specialist rental platform Ocasa has analysed the current cost of renting across each postcode in England and Wales, as well as the average household income. It found that 69% of areas are classified as affordable, based on the Office for National Statistics (ONS) definition. However, this means that 31% are unaffordable. 

The ONS defines a rental property as affordable as long as the cost of renting doesn’t exceed 30% of the household’s income. 

Ocasa points out that the average annual rent across England and Wales is £12,763, and the average annual household income is £43,341. Therefore, rent accounts for 29% of the average household income.

Regionally, rent is most affordable in the North East, where it consumes just 20% of the average household income of £35,774.

In Yorkshire & Humber, rent eats up 22% of annual income followed by the East Midlands (23%), North West (24%), West Midlands (25%), and Wales (26%). 

In the East, South East, and South West of England, average rent ranges from £12,000 to £15,000 and equates to 30% of household income in each region. 

The only region where Ocasa has found rent to be unaffordable is London. While the average income is £54,194, rent consumes 40% of this, with an average annual bill of £21,439.

Ocasa then analysed the rental market across England and Wales at postcode level and found that 31% of postcodes sit above the affordability threshold whereby rental income accounts for more than 30% of household income. 

London is home to all ten of the most unaffordable places in the country, with the worst offending outcodes being SW1 (77%), WC2 (74%), and W2 (73%). 

The least affordable area outside of London is the BN2 outcode area of Brighton & Hove, where rent eats up 60% of annual income. 

The WR2 postcode in Worcester is the most affordable pocket of the rental market, where a year’s rent costs just 15% of the average household income of £41,900. This is followed by DN21 in Gainsborough (15%) and TS26 in Hartlepool (15%).

Jack Godby, Head of Sales and Marketing at Ocasa, comments: “It’s reassuring to see that the topline cost of renting remains theoretically affordable for the average household but it’s fair to say that this probably isn’t the reality facing many at the moment, as the cost of living crisis is putting a real squeeze on our finances. 

“The cost of rent alone might not break the bank, but once you add household bills and travel, it equates to quite a considerable sum for the average household and millions of people are currently struggling to cover these costs.”

Housing pledges announced in Prime Minister Boris Johnson’s speech

Published On: June 13, 2022 at 8:57 am

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Housing pledges announced in Prime Minister Boris Johnson’s speech

Prime Minister Boris Johnson has announced a number of housing pledges. This includes extending Right to Buy to housing association tenants and allowing housing benefit to cover mortgage payments.

Responding to the announcement, Kiran Ramchandani, Director of Policy and External Affairs at Crisis, comments: “This ill-conceived announcement is the exact opposite of what we need to tackle the mounting housing crisis. For decades our social housing stock has been stripped bare, while over 96,000 people remain trapped in dingy B&Bs having given up all hope of ever moving into a home of their own. The notion that we’ll now sell off what little affordable housing we have left will only serve to make this situation worse.  

“The reality is that with housing benefit currently frozen, it’s barely enabling anyone to rent as it is. To suggest this money can now be used to secure mortgages without a costly investment to the benefits system is an utter fallacy.

“Moreover, it seems the Government is intent on creating a two-tier system where only working households will be able to use their housing benefit towards a mortgage payment, disregarding people with disabilities and those unable to work.    

“The only way to fix our broken housing system is to build more social homes which people can afford – we urge the Government to get on with doing this if we’re ever going to end homelessness for good.” 

Dan Wilson Craw, Deputy Director, Generation Rent, comments: “Ultimately, the Prime Minister failed to set out action to deal with the unaffordable level of house prices and rents.

“Neither the review of low-deposit mortgages, nor extending Right to Buy to housing associations will address the shortage of homes we need in places people most want to live. For that we need a programme of social house building beyond the one-to-one replacement of homes bought under Right to Buy.

“In the pandemic we heard from renters who had to pay rent with their hard-earned savings because they weren’t eligible for Universal Credit. Expanding eligibility to people saving a deposit will restore some fairness to the benefits system, but it’s important to remember that many more people with no savings are struggling to find somewhere to live with current Local Housing Allowance rates.

“Expanding housing benefit to cover mortgage payments is unlikely to help people currently receiving benefits to secure a mortgage when they won’t pass lenders’ affordability tests. However, depending on how lenders respond, it may help first-time buyers in work to get a mortgage. Right now, if you lose your job there is nothing to fall back on and that’s a risk for lenders.”

Marc von Grundherr, Director of Benham and Reeves, comments: “We’ve seen how previous initiatives allowing social tenants to purchase their properties has backfired, as it causes a significant shortage of stock for those most desperately in need of help, while also driving up property values in the process. 

“Of course, this time around it will be different, as they pledge to replace these purchased properties on a one for one basis. Unfortunately, if you believe that, you may also believe that the drunken shenanigans that took place at Downing Street during the pandemic really were innocent, work-related events. 

“The Government’s record of delivering new homes is woeful at best and social housing has long been an area of serious neglect. To allow them to auction off existing housing association stock while also failing miserably to replace it would be a big mistake indeed.”

James Forrester, Managing Director of Barrows and Forrester, comments: “Boris Johnson claims of a significant increase in the number of homes being built, but this simply isn’t true, which will come as little surprise given the fact that he’s lied to the British public time and time again. 

“In fact, the level of new homes reaching the market each year has fallen by fourteen percent and so once again, Boris’s bumblings couldn’t be further from the reality. 

“What’s more, promises to utilise Britain’s brownfield land is nothing more than a weary piece of recycled rhetoric, spouted on numerous occasions to create the illusion of tackling the housing crisis, but without actually following through with it.”

Average UK house price rises again, Halifax House Price Index reports

Published On: June 9, 2022 at 8:58 am

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Average UK house price rises again, Halifax House Price Index reports

Yet another record month has been reported for UK house prices, as Halifax sees continued growth.

The latest Halifax House Price Index states that house prices in May 2022 were 10.5% higher than May 2021. However, the monthly increase has slowed to 1.0%.

The average house price has been recorded as £289,099 by Halifax.

Geoff Garrett, Director of Henry Dannell, comments on the report: “A slower rate of house price growth is always likely to follow a reduction in buyer demand and that’s certainly what we’re now seeing following a dip in mortgage approval activity at the start of the year. 

“Buyers are acting with more caution with regard to the sums they are willing to borrow and, at the same time, lenders are reducing their range of products and increasing the rates they are prepared to offer. 

“However, it remains to be seen as to whether this more tentative approach will reverse upward house price trends completely, as insufficient stock remains an issue in the current market.”

Marc von Grundherr, Director of Benham and Reeves, comments: “The fact that the annual rate of growth continues to breach double figures is quite astonishing. 

“Although a slow in the rate of monthly house price growth may indicate an air of lethargy is starting to creep in following such a consistent run of upward growth, the market remains in very fine form.

“With market stock at a scarcity, it looks as though this upward trend is unlikely to subside any time soon, despite ongoing pressure in the form of the escalating cost of living and the threat of a further interest rate increase. 

James Forrester, Managing Director of Barrows and Forrester, comments: “Any mutterings of a property market crash have been greatly exaggerated and the UK property market has remained impervious to the dark clouds that have been gathering over the wider economy in recent months. 

“While many will be struggling with the increased cost of living, the hard task of saving is nothing new for the nation’s aspirational homebuyers who continue to swamp the market while the cost of borrowing remains very favourable.”

Christina Melling, CEO of Stipendium, comments: “It’s certainly a tough time if you’re a first-time buyer. Not only has the initial financial hurdle of buying grown immensely in the last decade, but the gaps between each rung of the property ladder have also become much further apart. 

“As a result, not only is it taking until far later in life to realise our dreams of homeownership, but the climb has become much harder and longer, even once we’ve secured that first foot.”

Report finds increasing rent prices are due to shrinking private rented sector

Published On: June 8, 2022 at 9:57 am

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SpareRoom study shows most affordable places to rent in the UK

Propertymark has found that rent prices are increasing due to landlords selling up and reducing the available rental stock.

The key findings of its report ‘A shrinking private rented sector?’ state that 53% of buy-to-let properties sold in March 2022 left the private rented sector (PRS).

It also states 84% of respondents reported a decrease in new investors in the PRS over the past three years.

An overall 49% reduction in available rental properties per branch was recorded in March 2022, compared to March 2019.

Nathan Emerson, CEO of Propertymark, states within the report: “Our research presents a worrying picture for private renters. The number of properties available to rent has been diminishing with a large portion of landlords choosing to sell their properties. A lack of property is the root cause for rent increases and rising figures on social housing lists.

“We know from our qualitative research that the most common reasons for landlords to choose to sell their properties and no longer provide homes are around risk, finances and viability.

“Landlords and letting agents have been the subject of extreme legislation changes as the UK Government tries to improve the sector. However, without a middle ground, these changes are actually proving detrimental to those they are supposed to protect. Sadly we do not see this improving as the sector braces itself for more changes within the anticipated Renter’s Reform Bill and upcoming energy efficiency targets.”

In response to the report, Dan Wilson Craw, Deputy Director of campaign group Generation Rent, comments: “Rents are rising and would-be tenants face bidding wars or demands for multiple months’ rent up-front.

“That is a result of large numbers of people moving back to cities since summer 2021 as universities and offices reopened, putting a strain on homes coming to market. We’re seeing similar rent inflation in the US and Australia.

“When landlords sell up, their properties don’t disappear. They continue to be lived in, either by tenants of the new owner, or by an owner-occupier whose old home is now available for a private renter to buy. Supply and demand stay the same so rents are unaffected.

“Reforms to the rental market are necessary to give private tenants better quality, longer term homes. The government has said that landlords will be able to evict in order to sell or move in – though we believe these grounds should come with protections against abuse. If some landlords are unhappy with that, they won’t be missed.

“Government plans aside, rents are too expensive, so we need to build more of every tenure in the places people want to live, to make sure everyone can afford a home.”

Cost of property maintenance in rental sector almost £30 billion each year

Published On: June 7, 2022 at 10:36 am

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Renters (Reform) Bill to cost letting agents £278.7m according to government

Maintenance in the rental sector in the UK has reached a total of £30 billion a year, according to research from Help me Fix, the property maintenance solution provider.

It says the general rule of thumb is that the cost of maintaining a property each year sits at roughly 1% of the property’s value. With the current average house price hitting £278,436, this means annual maintenance costs total £2,784 per property for private and social landlords and management companies.

If applied to total rental stock, the current annual maintenance cost for the UK rental market is £29.7 billion a year: £15.6 billion for private stock and £14.1 billion for social stock.

On a regional level, London is home to the biggest rental market and, as a result, has the largest annual rental maintenance bill at £9.7 billion. 

In the South East, annual rental market maintenance costs total £4.8 billion, with the East of England (£3.1 billion), the South West (£2.7 billion) and the North West (£2.4 billion) also home to some of the largest annual maintenance bills in the UK rental market. 

Ettan Bazil, founder of Help me Fix, comments: “Ongoing maintenance can be a sizeable outgoing when it comes to managing a rental property, but it’s also a necessity and ensures that the accommodation provided to private and social residents is fit for purpose and above board.

“Not only is the monetary total enormous, but the time and effort that is being spent completing these works is also a full-time commitment, particularly for management companies who are responsible for a large number of rental homes. 

“For social housing in particular, this is time and resource that could otherwise be put to better use, so it’s lucky that we live in an age where technology is disrupting old-fashioned maintenance methods.  

“By allowing landlords and property managers the ability to consult, assess and advise residents on their maintenance issues via a trained professional, but in a digital capacity first, we’ve been able to dramatically reduce unnecessary expenditure and labour hours, halving annual maintenance costs in the process. 

“Applied to the social sector alone, that’s a saving of £7bn per year should this approach be adopted on a sector wide basis, raising resident living standards in the process, not sacrificing them.”